Nation & World

Posted: Tuesday, January 03, 2006

Wall Street had a bullish start to the new year Tuesday,

with the Dow Jones industrials surging nearly 130 points after the Federal Reserve signaled a willingness to stop its campaign of interest rate hikes in the near future. In minutes from the Fed's Dec. 13 meeting, policymakers disagreed on exactly when to stop raising rates in quarter-percentage-point increments, but the Open Market Committee members did agree that an end was coming soon. The nation's benchmark rate stands at 4.25 percent, the result of quarter percentage point hikes over the past 13 meetings dating back to June 2004.

The Dow rose 129.91, or 1.21 percent, to 10,847.41.

Oil futures jumped by more than $2 a barrel Tuesday to settle at their highest level since mid-October. Traders said speculative buying was the main force behind the rally.

Other bullish factors in the mix included cold rain and snow in the U.S. Northeast, a natural gas dispute between Russia and Ukraine that unnerved Europe, and a declaration from a top Iranian official that Tehran will resume research into nuclear fuel production.

Oil futures finished 40 percent higher than they started in 2005, reaching a peak of $70.85 per barrel on Aug. 30 after Hurricane Katrina damaged Gulf of Mexico production platforms.

Light sweet crude oil for February delivery rose $2.10, or 3 percent, to settle at $63.14 a barrel on the New York Mercantile Exchange. It was the highest close since Oct. 18, when front-month crude futures settled at $63.20.

The nation's manufacturing sector grew at a slower pace in December than in November as prices paid for raw materials such as fuel declined. While the report issued Tuesday by the Institute for Supply Management showed growth, a sustained slowdown in the pace of manufacturing activity could be problematic for the overall U.S. economy. The institute said its manufacturing index stood at 54.2 in December, down from November's 58.1. A reading above 50 indicates the sector is expanding.

From wire reports

Walgreen Co., the nation's biggest drugstore chain by sales, said Tuesday that profit increased 5 percent in its fiscal first quarter, helped by higher generic drug sales. The drugstore chain earned $345.6 million, or 34 cents per share, in the three months ended Nov. 30, up from $328.6 million, or 32 cents per share, a year ago. Excluding stock options expensing, Walgreen said it would have earned 36 cents per share.

China's economy grew by a higher-than-forecast 9.8 percent in 2005, thanks to a startling new survey showing that authorities had underestimated the economy's size, the official Xinhua News Agency on Tuesday. The new figure, up from original estimates of 9.4 percent, accounts for the results of a national economic survey released in December that found economic output in 2004 was 16.8 percent higher than previously thought, Xinhua said. The larger figure was due almost entirely to robust growth in the service sector, long ignored by the outdated communist statistical system that focuses on manufacturing and relies on businesses to have a full-time employee to report statistics.